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Why ProAssurance (PRA) Might be Well Poised for a Surge

ProAssurance (PRA) could be a solid addition to your portfolio given a notable revision in the company's earnings estimates. While the stock has been gaining lately, the trend might continue since its earnings outlook is still improving.

Analysts' growing optimism on the earnings prospects of this medical professional liability insurer is driving estimates higher, which should get reflected in its stock price. After all, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements. Our stock rating tool -- the Zacks Rank -- has this insight at its core.

The five-grade Zacks Rank system, which ranges from a Zacks Rank #1 (Strong Buy) to a Zacks Rank #5 (Strong Sell), has an impressive externally-audited track record of outperformance, with Zacks #1 Ranked stocks generating an average annual return of +25% since 2008.

For ProAssurance, there has been strong agreement among the covering analysts in raising earnings estimates, which has helped push consensus estimates considerably higher for the next quarter and full year.

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The chart below shows the evolution of forward 12-month Zacks Consensus EPS estimate:

12 Month EPS

Current-Quarter Estimate Revisions

The company is expected to earn $0.07 per share for the current quarter, which represents a year-over-year change of -56.25%.

The Zacks Consensus Estimate for ProAssurance has increased 50% over the last 30 days, as three estimates have gone higher compared to no negative revisions.

Current-Year Estimate Revisions

For the full year, the company is expected to earn $0.36 per share, representing a year-over-year change of +357.14%.

In terms of estimate revisions, the trend for the current year also appears quite encouraging for ProAssurance. Over the past month, four estimates have moved higher compared to no negative revisions, helping the consensus estimate increase 38.46%.

Favorable Zacks Rank

The promising estimate revisions have helped ProAssurance earn a Zacks Rank #1 (Strong Buy). The Zacks Rank is a tried-and-tested rating tool that helps investors effectively harness the power of earnings estimate revisions and make the right investment decision. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

Our research shows that stocks with Zacks Rank #1 (Strong Buy) and 2 (Buy) significantly outperform the S&P 500.

Bottom Line

Investors have been betting on ProAssurance because of its solid estimate revisions, as evident from the stock's 5.1% gain over the past four weeks. As its earnings growth prospects might push the stock higher, you may consider adding it to your portfolio right away.

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ProAssurance Corporation (PRA) : Free Stock Analysis Report

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Zacks Investment Research